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American Tower Corporation Reports Fourth Quarter And Full Year 2012 Financial Results

Cautionary Language Regarding Forward-Looking Statements

This press release contains "forward-looking statements" concerning our goals, beliefs, expectations, strategies, objectives, plans, future operating results and underlying assumptions, and other statements that are not necessarily based on historical facts. Examples of these statements include, but are not limited to statements regarding our full year 2013 outlook, foreign currency exchange rates and our expectation regarding the declaration of regular distributions. Actual results may differ materially from those indicated in our forward-looking statements as a result of various important factors, including: (1) decrease in demand for our communications sites would materially and adversely affect our operating results and we cannot control that demand; (2) new technologies or changes in a tenant’s business model could make our tower leasing business less desirable and result in decreasing revenues; (3) our business is subject to government regulations and changes in current or future laws or regulations could restrict our ability to operate our business as we currently do; (4) if our tenants consolidate, merge or share site infrastructure with each other to a significant degree, our growth, revenue and ability to generate positive cash flows could be materially and adversely affected; (5) we could suffer adverse tax or other financial consequences if taxing authorities do not agree with our tax positions; (6) a substantial portion of our revenue is derived from a small number of tenants, and we are sensitive to changes in the creditworthiness and financial strength of our tenants; (7) our foreign operations are subject to economic, political and other risks that could materially and adversely affect our revenues or financial position, including risks associated with fluctuations in foreign currency exchange rates; (8) our expansion initiatives involve a number of risks and uncertainties that could adversely affect our operating results, disrupt our operations or expose us to additional risk if we are not able to successfully integrate operations, assets and personnel; (9) if we are unable to protect our rights to the land under our towers, it could adversely affect our business and operating results; (10) increasing competition in the tower industry may create pricing pressures that may materially and adversely affect us; (11) if we are unable or choose not to exercise our rights to purchase towers that are subject to lease and sublease agreements at the end of the applicable period, our cash flows derived from such towers would be eliminated; (12) if we fail to qualify as a REIT or fail to remain qualified as a REIT, we would be subject to tax at corporate income tax rates, which would substantially reduce funds otherwise available; (13) we may be limited in our ability to fund required distributions using cash generated through our TRSs; (14) complying with REIT requirements may limit our flexibility or cause us to forego otherwise attractive opportunities; (15) certain of our business activities may be subject to corporate level income tax and foreign taxes, which reduce our cash flows, and may have deferred and contingent tax liabilities; (16) we may need additional financing to fund capital expenditures, future growth and expansion initiatives and to satisfy our REIT distribution requirements;(17) our leverage and debt service obligations may materially and adversely affect us; (18) restrictive covenants in the loan agreements related to our securitization transaction, the loan agreements for our credit facilities and the indentures governing our debt securities could materially and adversely affect our business by limiting flexibility; (19) we may incur goodwill and other intangible asset impairment charges which could result in a significant reduction to our earnings; (20) we have limited experience operating as a REIT, which may adversely affect our financial condition, results of operations, cash flow and ability to satisfy debt service obligations; (21) we could have liability under environmental and occupational safety and health laws; (22) our towers or data centers may be affected by natural disasters and other unforeseen events for which our insurance may not provide adequate coverage; and (23) our costs could increase and our revenues could decrease due to perceived health risks from radio emissions, especially if these perceived risks are substantiated. For additional information regarding factors that may cause actual results to differ materially from those indicated in our forward-looking statements, we refer you to the information contained in Item 1A of our Form 10-Q for the nine months ended September 30, 2012. We undertake no obligation to update the information contained in this press release to reflect subsequently occurring events or circumstances.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
           
December 31, December 31,

2012

2011 (1)
ASSETS:
Current assets:
Cash and cash equivalents $368,618 $330,191
Restricted cash 69,316 42,215
Short-term investments and available-for-sale securities 6,018 22,270
Accounts receivable, net 136,971 100,610
Prepaid and other current assets 222,851 250,273
Deferred income taxes 25,754 29,596
Total current assets 829,528 775,155
Property and equipment, net 5,789,995 4,981,722
Goodwill 2,912,046 2,676,290
Other intangible assets, net 3,115,053 2,495,053
Deferred income taxes 213,518 209,031
Deferred rent asset 776,201 609,529
Notes receivable and other non-current assets 452,788 495,615
Total $14,089,129 $12,242,395
 
LIABILITIES AND EQUITY:
Current liabilities:
Accounts payable $89,578 $215,931
Accrued expenses 286,962 305,538
Distributions payable 189 -
Accrued interest 71,271 65,729
Current portion of long-term obligations 60,031 101,816
Unearned revenue 124,147 92,483
Total current liabilities 632,178 781,497
Long-term obligations 8,693,345 7,134,492
Asset retirement obligations 435,724 344,180
Other non-current liabilities 643,701 572,084
Total liabilities 10,404,948 8,832,253
 
COMMITMENTS AND CONTINGENCIES
EQUITY :
Common stock 3,959 3,936
Additional paid-in capital 5,012,124 4,903,800
Distributions in excess of earnings (1,196,907) (1,477,899)
Accumulated other comprehensive loss (183,347) (142,617)
Treasury stock(2) (62,728) -
Total American Tower Corporation equity 3,573,101 3,287,220
Noncontrolling interest 111,080 122,922
Total equity 3,684,181 3,410,142
Total $14,089,129 $12,242,395
 
(1) December 31, 2011 balances have been revised to reflect purchase accounting measurement period adjustments.
(2) As part of the Company’s reorganization to qualify as a REIT for federal income tax purposes, effective December 31, 2011, the Company completed the merger with its predecessor, approved by the Company’s stockholders in November 2011. At the time of the merger, each share of Class A common stock of American Tower held in treasury at December 31, 2011 ceased to be outstanding, and a corresponding adjustment was recorded to additional paid‐in capital and common stock.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
                 
Three Months Ended Twelve Months Ended
December 31, December 31,
2012 2011 2012 2011
REVENUES:
Rental and management $739,684 $640,883 $2,803,490 $2,386,185
Network development services 28,690 12,316 72,470 57,347

Total operating revenues

768,374 653,199 2,875,960 2,443,532
OPERATING EXPENSES:
Costs of operations (exclusive of items shown separately below):
Rental and management (including stock-based compensation expense of $199, $252, $793 and $1,105, respectively) 180,561 157,818 686,681 590,272
Network development services (including stock-based compensation expense $219, $314, $968 and $1,224, respectively) 13,645 7,800 35,798 30,684
Depreciation, amortization and accretion 178,488 143,615 644,276 555,517
Selling, general, administrative and development expense (including stock-based compensation expense of $11,911, $10,686, $50,222, and $45,108 respectively) 89,410 73,895 327,301 288,824
Other operating expenses 27,035 22,333 62,185 58,103
Total operating expenses 489,139 405,461 1,756,241 1,523,400
OPERATING INCOME 279,235 247,738 1,119,719 920,132
OTHER INCOME (EXPENSE):
Interest income, TV Azteca, net 3,543 3,627 14,258 14,214
Interest income 1,427 541 7,680 7,378
Interest expense (104,043) (85,119) (401,665) (311,854)
Loss on retirement of long-term obligations - - (398) -
Other expense (including unrealized foreign currency losses of $21,483, $29,548, $34,330 and $131,053, respectively) (18,832) (7,265) (38,300) (122,975)
Total other expense (117,905) (88,216) (418,425) (413,237)
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND
INCOME ON EQUITY METHOD INVESTMENTS 161,330 159,522 701,294 506,895
Income tax provision (43,187) 36,901 (107,304) (125,080)
Income on equity method investments 10 11 35 25
NET INCOME $118,153 $196,434 $594,025 $381,840
Net loss (income) attributable to noncontrolling interest 17,526 8,676 43,258 14,622
NET INCOME ATTRIBUTABLE TO AMERICAN TOWER CORPORATION $135,679 $205,110 $637,283 $396,462
 
NET INCOME PER COMMON SHARE AMOUNTS
Basic net income attributable to American Tower Corporation $0.34 $0.52 $1.61 $1.00
Diluted net income attributable to American Tower Corporation $0.34 $0.52 $1.60 $0.99
 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
BASIC 395,195 393,347 394,772 395,711
DILUTED 399,625 397,724 399,287 400,195
 
DISTRIBUTIONS DECLARED PER SHARE: $0.24 $0.35 $0.90 $0.35
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
       
Twelve Months Ended
December 31,
2012 2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $594,025 $381,840
Adjustments to reconcile net income to cash provided by operating activities:
Stock-based compensation expense 51,983 47,437
Depreciation, amortization and accretion 644,276 555,517
Other non-cash items reflected in statements of operations 130,517 243,648
Increase in net deferred rent asset (130,512) (113,042)
(Increase) decrease in restricted cash (26,500) 11,867
Decrease (increase) in assets 40,961 (72,516)
Increase in liabilities 109,641 111,191
Cash provided by operating activities 1,414,391 1,165,942
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for purchase of property and equipment and construction activities (568,048) (523,015)
Payments for acquisitions, net of cash acquired (1,997,955) (2,320,673)
Proceeds from sales of short-term investments, available-for-sale securities and other
long-term assets 374,682 69,971
Payment for short-term investments (352,306) (42,590)
Deposits, restricted cash and other (14,758) 25,495
Cash used in investing activities (2,558,385) (2,790,812)
 
CASH FLOWS FROM FINANCING ACTIVITIES:
(Repayments of) proceeds from short-term borrowings, net (55,264) 128,121
Borrowings under credit facilities 2,582,000 1,005,014
Proceeds from issuance of senior notes 698,670 499,290
Proceeds from term loan credit facility 750,000 -
Proceeds from other long-term borrowings 177,299 212,783
Repayments of notes payable, credit facilities and capital leases (2,658,566) (395,384)
Contributions from noncontrolling interest holders, net 52,761 140,880
Purchases of common stock (62,728) (437,402)
Proceeds from stock options, warrants and stock purchase plan 55,441 85,642
Distributions (355,574) (137,765)
Deferred financing costs and other financing activities (13,673) (15,084)
Cash provided by financing activities 1,170,366 1,086,095
 
Net effect of changes in foreign currency exchange rates on cash and cash equivalents 12,055 (14,997)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 38,427 (553,772)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 330,191 883,963
CASH AND CASH EQUIVALENTS, END OF PERIOD $368,618 $330,191
 
CASH PAID FOR INCOME TAXES, NET $69,277 $53,909
CASH PAID FOR INTEREST $366,458 $274,234
UNAUDITED RESULTS FROM OPERATIONS, BY SEGMENT
(In thousands, except percentages)        
 
Three Months Ended, December 31, 2012
Rental and Management

Network Development Services

Total
Domestic International Total
Segment revenues $499,865 $239,819 $739,684 $28,690 $768,374
Segment operating expenses(1) 84,367 95,995 180,362 13,426 193,788
Interest income, TV Azteca, net - 3,543 3,543 - 3,543
Segment Gross Margin 415,498 147,367 562,865 15,264 578,129
Segment selling, general, administrative
and development expense(1) 25,025 27,146 52,171 2,334 54,505
Segment Operating Profit $390,473 $120,221 $510,694 $12,930 $523,624
Segment Operating Profit Margin 78% 50% 69% 45% 68%
 
Three Months Ended, December 31, 2011
Rental and Management

Network Development Services

Total
Domestic International Total
Segment revenues $464,945 $175,938 $640,883 $12,316 $653,199
Segment operating expenses(1) 91,602 65,964 157,566 7,486 165,052
Interest income, TV Azteca, net - 3,627 3,627 - 3,627
Segment Gross Margin 373,343 113,601 486,944 4,830 491,774
Segment selling, general, administrative
and development expense(1) 20,513 21,487 42,000 2,734 44,734
Segment Operating Profit $352,830 $92,114 $444,944 $2,096 $447,040
Segment Operating Profit Margin 76% 52% 69% 17% 68%
 
Twelve Months Ended, December 31, 2012
Rental and Management

Network Development Services

Total
Domestic International Total
Segment revenues $1,940,689 $862,801 $2,803,490 $72,470 $2,875,960
Segment operating expenses(1) 357,555 328,333 685,888 34,830 720,718
Interest income, TV Azteca, net - 14,258 14,258 - 14,258
Segment Gross Margin 1,583,134 548,726 2,131,860 37,640 2,169,500
Segment selling, general, administrative
and development expense(1) 85,663 95,579 181,242 6,744 187,986
Segment Operating Profit $1,497,471 $453,147 $1,950,618 $30,896 $1,981,514
Segment Operating Profit Margin 77% 53% 70% 43% 69%
 
Twelve Months Ended, December 31, 2011
Rental and Management

Network Development Services

Total
Domestic International Total
Segment revenues $1,744,260 $641,925 $2,386,185 $57,347 $2,443,532
Segment operating expenses(1) 353,458 235,709 589,167 29,460 618,627
Interest income, TV Azteca, net - 14,214 14,214 - 14,214
Segment Gross Margin 1,390,802 420,430 1,811,232 27,887 1,839,119
Segment selling, general, administrative
and development expense(1) 77,041 82,106 159,147 7,864 167,011
Segment Operating Profit $1,313,761 $338,324 $1,652,085 $20,023 $1,672,108
Segment Operating Profit Margin 75% 53% 69% 35% 68%
 
(1) Excludes stock-based compensation expense.
UNAUDITED SELECTED FINANCIAL INFORMATION  
(In thousands, except where noted. Totals may not add due to rounding.)
           
Selected Balance Sheet Detail:
December 31, 2012
Long-term obligations summary, including current portion

December 31, 2012

Pro Forma (1)
2011 Credit Facility $265,000 $-
2012 Credit Facility 992,000 322,000
2012 Term Loan 750,000 750,000
4.625% Senior Notes due 2015 599,638 599,638
7.000% Senior Notes due 2017 500,000 500,000
4.500% Senior Notes due 2018 999,414 999,414
7.250% Senior Notes due 2019 296,272 296,272
5.050% Senior Notes due 2020 699,333 699,333
5.900% Senior Notes due 2021 499,356 499,356
4.700% Senior Notes due 2022 698,760 698,760
3.500% Senior Notes due 2023 - 991,850
Total Unsecured at American Tower Corporation $6,299,773 $6,356,624
Commercial Mortgage Pass-Through Certificates, Series 2007-1 1,750,000 1,750,000
Unison Notes (2) 207,188 207,188
South African Facility (3) 98,456 98,456
Colombian long-term credit facility (3) 76,347 76,347
Colombian bridge loans (3) 53,169 53,169
Shareholder loans (4) 211,150 211,150
Capital leases 57,293 57,293
Total Secured or Subsidiary Debt $2,453,603 $2,453,603
Total debt $8,753,376 $8,810,227
Cash and cash equivalents 368,618
Net debt (total debt less cash and cash equivalents) $8,384,758
 
(1) Pro Forma as of February 26, 2013 for: (a) the registered public offering of $1.0 billion aggregate principal amount of senior unsecured notes and associated repayment of certain indebtedness under the 2011 and 2012 Credit Facilities; and (b) the aggregate borrowing of an additional $49 million under the 2012 Credit Facility.
(2) The Unison Notes are secured debt and were assumed as a result of the acquisition of certain legal entities holding a portfolio of property interests from Unison Holdings LLC and Unison Site Management II, L.L.C.
(3) Denominated in local currency.
(4) Denominated in USD, reflects balances attributable to minority shareholder loans in the Company’s joint ventures in Colombia, Ghana and Uganda.
 
Three Months Ended
Calculation of Net Leverage Ratio ( $ in thousands) December 31, 2012
Total debt $8,753,376
Cash and cash equivalents 368,618
Numerator: net debt (total debt less cash and cash equivalents) $8,384,758
 
Adjusted EBITDA $500,630
Denominator: annualized Adjusted EBITDA 2,002,520
Net leverage ratio 4.2x
UNAUDITED SELECTED FINANCIAL INFORMATION      
(In thousands, except where noted. Totals may not add due to rounding.)
             
Three Months Ended Twelve Months Ended
Share count rollforward: (in millions of shares)   December 31,2012 December 31,2012
Total common shares, beginning of period 395.4 393.6
Common shares repurchased (0.6) (0.9)
Common shares issued 0.3 2.3
  Total common shares outstanding, end of period (1) 395.1 395.1
(1) As of December 31, 2012, excludes (a) 3.2 million potentially dilutive shares associated with vested and exercisable stock options with an average exercise price of $37.07 per share, (b) 2.7 million potentially dilutive shares associated with unvested stock options, and (c) 1.9 million potentially dilutive shares associated with unvested restricted stock units.
Total rental and management straight-line revenue and expense:
In accordance with GAAP, the Company recognizes consolidated rental and management revenue and expense related to non-cancellable customer and ground lease agreements with fixed escalations on a straight-line basis, over the applicable lease term. As a result, the Company’s revenue recognized may differ materially from the amount of cash collected per tenant lease, and the Company’s expense incurred may differ materially from the amount of cash paid per ground lease. Additional information regarding straight-line accounting can be found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 in the section entitled "Revenue Recognition," in note 1, "Business and Summary of Significant Accounting Policies" within the notes to the consolidated financial statements. A summary of total rental and management straight-line revenue and expense, which represents the non-cash revenue and expense recorded due to straight-line recognition, is as follows:
       
Three Months Ended Twelve Months Ended
December 31, December 31,
2012   2011 2012   2011

Total rental and management operations straight-line revenue

$47,260 $50,994 $165,806 $143,994
Total rental and management operations straight-line expense $7,553 $7,827 $33,700 $30,952
 
Three Months Ended Twelve Months Ended
December 31, December 31,
Selling, general, administrative and development expense breakout: 2012 2011 2012 2011
Total rental and management overhead $52,171 $42,000 $181,242 $159,147
Network development services segment overhead 2,334 2,734 6,744 7,864
Corporate and development expenses 22,994 18,475 89,093 76,705
Stock-based compensation expense 11,911 10,686 50,222 45,108
Total $89,410 $73,895 $327,301 $288,824
 
Three Months Ended Twelve Months Ended
December 31, December 31,
International pass-through revenue detail: 2012 2011 2012 2011
Pass-through revenue $67,933 $49,388 $229,105 $176,085
 
SELECTED CASH FLOW DETAIL:
Three Months Ended Twelve Months Ended
December 31, December 31,
Payments for purchase of property and equipment and construction activities: 2012 2011 2012 2011
Discretionary - capital projects $86,850 $74,996 $279,015 $296,906
Discretionary - ground lease purchases 33,887 11,012 82,349 91,292
Redevelopment 27,954 18,020 86,656 55,301
Capital improvements (1) 36,477 16,714 99,981 60,829
Corporate 5,853 5,184 20,047 18,687
Total $191,021 $125,926 $568,048 $523,015

____

(1) Includes new market start-up capital expenditures of: (a) approximately $5.6 million during the three months ended December 31, 2012; and (b) approximately $24.5 million during the twelve months ended December 31, 2012.
 

UNAUDITED SELECTED FINANCIAL INFORMATION

(Totals may not add due to rounding.)
         
SELECTED STATEMENT OF OPERATIONS DETAIL:
The following table reflects the estimated impact of foreign currency exchange rate fluctuations, straight-line revenue and expense recognition and material one-time items on total rental and management revenue, Adjusted EBITDA and AFFO:
 
The calculation of Core Growth is as follows:

Total Rental and

Management Revenue

Adjusted EBITDA AFFO
Three Months Ended December 31, 2012
Core Growth 19.3% 19.6% 11.6%
Estimated impact of fluctuations in foreign currency exchange rates (1.8)% (1.4)% (1.4)%
Impact of straight-line revenue recognition (2.0)% (2.8)% -
Impact of material one-time items - 1.4% (5.6)%
Reported growth 15.4% 16.8% 4.7%
 

Total Rental and Management Revenue

Adjusted EBITDA AFFO
Twelve Months Ended December 31, 2012
Core Growth 21.1% 21.3% 18.8%
Estimated impact of fluctuations in foreign currency exchange rates (3.8)% (3.1)% (3.8)%
Impact of straight-line revenue recognition (0.2)% (0.1)% -
Impact of material one-time items 0.5% 0.6% (1.4)%
Reported growth 17.5% 18.6% 13.5%
           
SELECTED PORTFOLIO DETAIL - OWNED SITES:
 
Tower Count(1): As of As of
September 30, 2012 Constructed Acquired Adjustments December 31, 2012
United States(2) 21,668 87 627 152 22,534
Brazil 4,311 28 - 6 4,345
Chile 1,180 1 - - 1,181
Colombia 2,847 58 42 57 3,004
Germany - - 2,031 - 2,031
Ghana 1,908 18 - - 1,926
India 10,116 287 - (25) 10,378
Mexico(3) 5,562 26 190 (1) 5,777
Peru 475 - - 25 500
South Africa 1,601 2 - 1 1,604
Uganda 1,031 12 - - 1,043

___

Total 50,699 519 2,890 215 54,323
(1) Excludes in-building and outdoor distributed antenna system networks.
(2) Includes 274 broadcast towers.
(3) Includes 199 broadcast towers.

 

 

 

 

 

 

UNAUDITED RECONCILIATIONS TO GAAP MEASURES AND THE CALCULATION OF DEFINED FINANCIAL MEASURES

(In thousands, except percentages. Totals may not add due to rounding.)
       
The reconciliation of net income to Adjusted EBITDA and the calculation of Adjusted EBITDA Margin are as follows:
 
Three Months Ended Twelve Months Ended
December 31, December 31,
2012 2011 2012 2011
Net income $118,153 $196,434 $594,025 $381,840
Income from equity method investments (10) (11) (35) (25)
Income tax provision (benefit) 43,187 (36,901) 107,304 125,080
Other expense 18,832 7,265 38,300 122,975
Loss on retirement of long-term obligations - - 398 -
Interest expense 104,043 85,119 401,665 311,854
Interest income (1,427) (541) (7,680) (7,378)
Other operating expenses 27,035 22,333 62,185 58,103
Depreciation, amortization and accretion 178,488 143,615 644,276 555,517
Stock-based compensation expense 12,329 11,252 51,983 47,437
Adjusted EBITDA $500,630 $428,565 $1,892,421 $1,595,403
Divided by total revenue 768,374 653,199 2,875,960 2,443,532
Adjusted EBITDA Margin 65% 66% 66% 65%
UNAUDITED REIT MEASURES AND RECONCILIATIONS TO GAAP MEASURES    
(In thousands, except per share data. Totals may not add due to rounding.)
         
The reconciliation of net income to Funds From Operations and the calculation of Adjusted Funds From Operations and Adjusted Funds From Operations per Share are presented below:
 
Three Months Ended Twelve Months Ended
December 31, December 31,
2012 2011 2012 2011
Net Income $118,153 $196,434 $594,025 $381,840
Adjustment for pro forma income tax provision (benefit) (1) - (40,570) - 82,908
Pro forma net income 118,153 155,864 594,025 464,748

Real estate related depreciation, amortization and accretion

154,329 124,977 562,298 481,926
Funds From Operations 272,482 280,841 1,156,323 946,674
Straight-line revenue (47,260) (50,994) (165,806) (143,994)
Straight-line expense 7,553 7,827 33,700 30,952
Stock-based compensation expense 12,329 11,252 51,983 47,437
Non-cash portion of tax provision 2,375 (1,432) 38,027 (11,737)
Non-real estate related depreciation, amortization and accretion 24,159 18,638 81,978 73,591
Amortization of deferred financing costs, capitalized interest and debt discounts and premiums (2) 14,492 2,742 21,008 11,021
Other expense (3) 18,832 7,265 38,300 122,975
Loss on retirement of long-term obligations - - 398 -
Other operating expense (4) 27,035 22,333 62,185 58,103
Capital improvement capital expenditures (36,477) (16,714) (99,981) (60,829)
Corporate capital expenditures (5,853) (5,184) (20,047) (18,687)
Adjusted Funds From Operations $289,667 $276,574 $1,198,068 $1,055,505
Divided by weighted average diluted shares outstanding 399,625 397,724 399,287 400,195
Adjusted Funds From Operations per Share $0.72 $0.70 $3.00 $2.64

___

(1) Adjustment for three and twelve months ended December 31, 2011 assumes the REIT election occurred effective as of January 1, 2011, and that as a result, income taxes would no longer be payable on certain of the Company’s activities. As a result, on a pro forma basis, income tax expense is lower by the amount of the adjustment. For more information, see Note (B) to Unaudited Pro Forma Consolidated Financial Statements in the Company’s Definitive Proxy Statement, filed with the SEC on October 11, 2011. The pro forma adjustment set forth in this footnote has been made solely for the purpose of this pro forma information. This information is not necessarily indicative of the financial position or operating results that would have been achieved had the REIT election been effective as of January 1, 2011, nor is it necessarily indicative of future financial position or operating results. It also does not reflect one-time transaction costs related to the REIT election and the potential immaterial effect of lower cash balances these transactions have on interest income, higher borrowing costs or foregone investment opportunities.
(2) Reflects accrued non-cash interest expense attributable to joint-venture loans.
(3) Primarily includes unrealized (gain) loss on foreign currency exchange rate fluctuations.
(4) Primarily includes impairments and transaction related costs.




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